Cape Town: Cape Town audit findings involving procurement and contract management have cost the City its clean-audit status for the 2024/25 financial year, according to the Auditor-General’s consolidated municipal report tabled in Parliament on Wednesday, 24th June. Auditor-General Tsakani Maluleke confirmed that Cape Town remained one of only three metros with an unqualified financial opinion, meaning its published financial statements were credible, but a material compliance finding prevented it from receiving an unqualified opinion without findings. The City disputes the Auditor-General’s interpretation of three Bid Evaluation Committee processes, says no financial loss or inaccurate financial reporting resulted from the matters, and is considering a judicial review after the formal dispute-resolution process failed to change the finding.
Cape Town’s Audit Outcome Regresses
Cape Town has lost the clean-audit status that helped distinguish it from South Africa’s other large metropolitan municipalities, although the Auditor-General did not qualify the City’s financial statements or find that they were materially unreliable.
The distinction is central to understanding what happened.
An unqualified audit opinion means the Auditor-General concluded that the municipality’s financial statements fairly represented its financial position in all material respects. A clean audit goes one step further. It requires credible financial statements, reliable performance reporting and no material findings involving compliance with legislation.
Cape Town passed the financial reporting test and avoided a material finding on its reported service-delivery performance. However, the procurement and contract-management finding meant that it no longer met all three requirements for a clean audit.
The result was an unqualified audit opinion with findings, rather than the unqualified opinion without findings recorded in the previous financial year.
Cape Town was joined by eThekwini and the consolidated City of Johannesburg group as the only metros with unqualified financial opinions. The remaining five metros received qualified opinions, while Johannesburg’s standalone municipal financial statements also regressed to a qualified opinion.
Despite Cape Town’s stronger financial position compared with most other metros, the consolidated result left South Africa without a single clean metropolitan audit for 2024/25.
Auditor-General Flags Procurement Compliance
The Auditor-General identified Cape Town’s weakness in procurement and contract management, an area that continues to cause audit failures across local government.
Sharrone Adams, head of audit at the Auditor-General of South Africa, said Cape Town had specifically regressed because of findings involving procurement and contract management.
Adams said these findings formed part of a broader pattern of non-compliance with laws and regulations across the country’s metros. Procurement rules exist to ensure that municipal contracts are awarded fairly, transparently and in the public interest.
When procurement controls are weakened or interpreted inconsistently, municipalities become vulnerable to unfair bidding, conflicts of interest, inflated prices, manipulation and financial losses.
The Auditor-General’s national report found material compliance findings at all eight metros. Across metros and their municipal entities, persistent non-compliance generated R73.87 billion in irregular expenditure over the four-year municipal administration, including R23.14 billion during 2024/25.
The Auditor-General said 77% of that irregular expenditure was connected to failures in procurement and contract-management processes.
These national figures do not mean that Cape Town was responsible for the full amount, nor do they establish that the City suffered financial loss through the disputed Bid Evaluation Committee decisions. They show why the Auditor-General regards procurement compliance as a material governance issue even when a municipality’s financial statements remain credible.
City Rejects Finding As A Technical Dispute
The City welcomed the confirmation that its finances remained unqualified but rejected the compliance finding, describing it as a non-financial and technical disagreement over the interpretation of supply-chain rules.
According to the City, the finding involved decisions taken by Bid Evaluation Committees while assessing companies competing for municipal contracts.
The first disputed matter concerned the documentary evidence used to confirm whether a bidding company was registered with the relevant bargaining council. The City maintains that the company was correctly registered and that the evidence considered by the committee was sufficient to establish compliance.
The second matter concerned whether a committee could consider a bidder’s previous performance when that business had earlier traded through a different legal entity.
The third concerned whether the City could consider a bidder’s previous contractual performance when assessing a new bid. The City believes that officials should be able to take past failures into account before awarding further public contracts.
This final point could have consequences extending beyond the audit itself. Municipalities must avoid unfairly excluding bidders, but they also have a duty to protect public money and service delivery from contractors with histories of poor performance.
The City argues that preventing bid committees from considering relevant previous failures could force municipalities to ignore known risks when evaluating future contracts.
It says its Bid Evaluation Committees complied with the purpose and substance of the Municipal Supply Chain Management Regulations in all three matters.
Formal Dispute Delayed Cape Town’s Audit
The disagreement did not begin with Wednesday’s consolidated report.
Cape Town formally challenged the provisional finding during the audit process, delaying the completion and tabling of its 2024/25 audit report.
In February, the Auditor-General confirmed that the audits of Cape Town, Johannesburg and Ekurhuleni had not been signed off because all three metros had declared formal disputes.
Auditor-General spokesperson Africa Boso said at the time that the disputes were being managed through the institution’s established dispute-resolution procedures.
The delays created concern because municipalities must complete and table audited annual reports within deadlines set by the Municipal Finance Management Act. Cape Town, Johannesburg and Ekurhuleni also faced pressure linked to the reporting requirements governing their listed municipal debt instruments.
Cape Town’s dispute was ultimately resolved without the Auditor-General withdrawing the finding.
The audit was finalised with an unqualified opinion, but the compliance matter remained in the final report. The City announced in March that it was considering whether to take the issue on judicial review.
A judicial review would not ask a court to conduct a new municipal audit. It would test whether the Auditor-General interpreted and applied the relevant legal rules correctly when reaching the disputed conclusion.
The City has not confirmed that papers have been filed. Its stated position is that legal clarification may be needed because the principles could affect how municipal bid committees assess evidence and previous contractor performance in future tenders.
What The Audit Does And Does Not Say
The outcome does not mean that Cape Town’s financial statements were rejected.
It also does not amount to a qualified, adverse or disclaimed audit opinion.
A qualified opinion would mean the Auditor-General found material errors or omissions in particular areas of the financial statements. An adverse opinion would indicate that the statements were materially misstated and could not be relied upon as a fair account of the municipality’s finances. A disclaimer would mean the Auditor-General could not obtain enough evidence to form an opinion.
Cape Town received none of those outcomes.
The Auditor-General accepted the credibility of the City’s financial statements. Cape Town was also one of only two metros, together with Ekurhuleni, that avoided a material finding on reported performance information.
That means the Auditor-General did not identify a material problem with the usefulness or reliability of Cape Town’s audited service-delivery reporting.
However, an unqualified financial opinion should not be described as a clean audit when material compliance findings remain. The terms are not interchangeable.
The City’s announcement in March placed strong emphasis on its 20th consecutive unqualified opinion and described the outcome as confirmation of sound financial management. While that statement is correct regarding its financial statements, it does not remove the significance of the procurement finding or the regression from clean to unqualified with findings.
Cape Town Still Outperforms Most Metros
Cape Town’s regression occurred within a national local-government system facing far deeper financial and governance failures.
Only 39 municipalities, representing 15% of those audited, achieved clean audits during 2024/25. Those municipalities controlled just 8% of total local-government expenditure.
The Auditor-General found that 38 municipalities had regressed since the beginning of the current municipal administration. These municipalities accounted for almost one-quarter of the local-government expenditure budget.
At metro level, the picture was particularly concerning.
The eight metros serve approximately 24.9 million people and provide services to 8.9 million households. Together, they manage almost R336 billion, or 54%, of the country’s local-government expenditure budget.
None received a clean audit.
Five metros received qualified opinions. The Auditor-General linked these outcomes to poor record-keeping, weak internal review, unreliable reconciliations and over-reliance on auditors to identify mistakes that municipal controls should have prevented.
Cape Town therefore remains ahead of most metros on the credibility of its financial statements and performance reporting. But the Auditor-General’s result also shows that the City is not exempt from the procurement and compliance risks affecting local government.
Why Procurement Findings Matter To Capetonians
Municipal procurement decisions shape almost every service delivered in Cape Town.
The City uses contractors and suppliers for road construction, electricity infrastructure, water and sanitation projects, waste services, housing development, security systems, vehicle fleets, information technology and the maintenance of public facilities.
A procurement process can be financially accurate on paper while still failing to comply with legal requirements. That is why compliance forms a separate part of the audit.
Tender rules are intended to create a fair process, protect public money and prevent officials from tailoring decisions to favour or exclude particular companies.
But municipal officials must also evaluate whether bidders can perform the work. This includes considering technical ability, regulatory registration, financial capacity and relevant previous experience.
The Cape Town dispute appears to sit at the point where those duties meet. The Auditor-General questioned how particular evidence and previous performance were considered, while the City argues that its committees acted lawfully and protected the municipality from contracting risks.
That legal disagreement matters because an eventual court ruling could clarify what evidence bid committees may accept and how far they may go when considering the histories of bidders or related entities.
Auditor-General Warns Metros About Accountability
Maluleke said the deterioration among metros showed that sound governance controls had not become firmly embedded in their institutions.
Her report raised concern about continued failures to comply with legislation, weak accountability structures, conflicts of interest and slow responses when the Auditor-General identified irregularities.
The report found that metros were often slow to investigate unauthorised, irregular, fruitless and wasteful expenditure. It also questioned whether municipal councils and oversight structures were consistently holding officials accountable.
The Auditor-General called for stronger intervention from Parliament, provincial legislatures, national Treasury and the Department of Cooperative Governance and Traditional Affairs.
Metros have larger revenue bases and access to more specialised skills than many smaller municipalities. The Auditor-General therefore expects them to set the standard for financial management, governance and service delivery.
Instead, the latest results show that all eight fell short of the clean-audit standard.
City Faces A Choice Over Judicial Review
Cape Town must now decide whether to accept the finding and adjust its procurement processes or ask a court to clarify the disputed principles.
A judicial review could vindicate the City’s position, confirm the Auditor-General’s interpretation or result in a more detailed legal framework for future bid evaluations.
Court action would also bring the documents, legal arguments and affected tender processes into sharper public focus.
Until then, the formal outcome remains unchanged. Cape Town received credible, unqualified financial statements, but material non-compliance in procurement and contract management prevented the City from retaining a clean audit.
For Capetonians, the audit presents a more complex picture than either political praise or criticism may suggest.
The City continues to maintain stronger financial reporting than most metropolitan governments. At the same time, the Auditor-General has recorded a material legal-compliance concern in an area where billions of rand in public contracts are awarded.
Both facts form part of the public record, and both require proper scrutiny.
Q&A
Did Cape Town receive a clean audit?
No. Cape Town received an unqualified audit opinion with findings for the 2024/25 financial year. Its financial statements were credible, but a material procurement and contract-management finding prevented a clean audit.
Were Cape Town’s financial statements qualified?
No. The City received an unqualified financial opinion, meaning its statements fairly represented its financial position in all material respects.
What did the Auditor-General find?
The material finding concerned compliance with procurement and contract-management requirements during Bid Evaluation Committee processes.
Does the finding prove money was stolen?
No. The finding does not by itself establish theft, corruption or financial loss. It concerns whether procurement processes complied with legal requirements.
Why does the City dispute the finding?
The City says its committees acted within municipal supply-chain regulations when considering bargaining-council registration evidence and the previous performance of bidders or related legal entities.
Is Cape Town taking the Auditor-General to court?
The City has said it is considering a judicial review. It has not publicly confirmed that a review application has been filed.
How does Cape Town compare with other metros?
Cape Town remains one of only three metros with an unqualified financial opinion. However, none of South Africa’s eight metros achieved a clean audit for 2024/25.
SAI Search Summary
Cape Town audit findings involving procurement and contract management caused the City to regress from a clean audit to an unqualified audit opinion with findings for 2024/25. The Auditor-General accepted Cape Town’s financial statements as credible and recorded no material finding on its performance information. However, a disputed compliance finding involving Bid Evaluation Committee processes prevented the City from retaining clean-audit status. Cape Town says the finding is technical and non-financial and is considering a judicial review to clarify the legal principles.
Source: Auditor-General South Africa, Auditor-General Tsakani Maluleke and Head of Audit Sharrone Adams; Daily Maverick, Victoria O’Regan; City of Cape Town, Mayoral Committee Member for Finance Siseko Mbandezi; Moneyweb and SAfm Market Update, Jimmy Moyaha.
